While there is no unanimous definition and interpretation of the term ‘entrepreneurship’ and an ‘entrepreneur’, the common understanding is coherent with that of the Timmons Model and the economic thinker Richard Cantillon respectively. According to the model, a successful entrepreneurship is the combination of three vital factors – opportunities, time and resources (Scudder, 2011). Whereas an entrepreneur is an economic agent that actively connects the customers with the producers by building a productive team (Scheid, 2013). With this backdrop, in the following essay, the profiles of two well-known entrepreneurs are detailed along with their stance in successful entrepreneurship. The rationale for the selection of these candidates is discussed and justified. The essay compares and analyses between the two based on the entrepreneurship models followed by them.
The two entrepreneurs selected to serve the purpose are – Jack Ma, a Chinese Entrepreneur and Richard Branson, a British Entrepreneur. Both entrepreneurs belong to two different industries and economy setups that make them worth a comparison. Forbes has listed them in the top billionaires. Details about their profiles are provided below:
Jack Ma, the founder of Alibaba Group that has a strong foothold in the online businesses, is the eighteenth richest man in the world with a net worth of $29.7bn (Bloomberg, 2014). He founded the first online company in China – China Yellowpages in 1995. After heading an IT company for a year before 1999, he laid the foundational stone for Alibaba Group with Alibaba.com that is a Chinese B2B portal. Later he developed and expanded the group to include Taobao Marketplace, Alibaba Cloud Computing, 1688.com, Alipay, AliExpress.com, eTao and Juhuasuan. The B2B portals have a strong presence in China with leading volumes of transactions that have forced eBay to exit its operations there. He has bagged many awards as an entrepreneur and philanthropist. After retiring as the CEO of Alibaba Group in 2013, he now is the Executive Chairman of the Group with a new vision to help more people make healthy and sustainable money. His growing interest in conservation of nature has paved the way for him to become the Chairman of the Board of the Nature Conservancy’s (Braun, 2010).
Sir Richard Branson is the founder of the Virgin Group that comprises 400 plus companies (Anonymous, 2010). The seventh richest person in the UK, Sir Richard is known to have started his very first venture with Student magazine, which was an overnight success. Next was a mail-order record store in 1970, which was later developed into a chain of stores, called as Virgin Megastores. The Virgin Group gained momentum in the 1980s with the setup of Virgin Atlantic and the music label Virgin Records. The music label was impacted due to many strategic decisions. Virgin Mobile was launched in 1999 and Virgin Blue in 2000. In 2006, Virgin Mobile was sold, and Virgin Media was launched with a humongous fanfare. Later in 2006, he formed Virgin Comics and Virgin Animation followed by Virgin Health Bank in 2007. The Virgin Group is doing well in the transports with more mergers and acquisitions in the airlines in Europe, America and Australia and railways as well. Further, Branson has also made the Group’s presence felt in the beverage industry. The sky is the limit for this entrepreneur who initiated the plan of space tourism in alliance with the big shots of IT under the Virgin Galactic tag (Boyle, 2013). With his passion for living life king size while taking up new challenges he has also served the humanity.
The rationale for the selection of the above two profiles is supported with the help of the entrepreneurship concepts and is justified using the different theories.
The rationale to choose these two candidates for the study of entrepreneurship is their highly dynamic profile. Both the entrepreneurs have made strategic decisions to keep re-investing the returns generated in the Group by identifying the opportunities strategically. While the Virgin Group has a lot many (read as beyond 400) subsidiary companies, Alibaba Group has only nine, and yet the founder of the later Group has a net worth five times that of Sir Richard Branson’s net worth which is reportedly $4.9bn in 2014 (Forbes, 2014). Virgin Group has a presence in most of the industries like telecommunication, entertainment, media, transports, B2C portals, tourism, etc. whereas Alibaba Group shows a focussed presence on the internet based marketplaces. This implies that the way both these entrepreneurs think to differ a lot. The entrepreneurship models adopted by each one of them also differs. Therefore, this makes them worthy of a comparison to understand what entrepreneurial characteristics distinguish the two of them (Gulati, 2004).
Per the dynamic model for entrepreneurship as developed by (Buera, 2008), an individual always has to make a choice – earn a wage and invest in limited returns alternatives or to work to invest in a personal new combination. The second alternate exhibits an entrepreneurial ability. Carrying out a new combination of every investment is what distinguishes an entrepreneur from a mere business owner or manager (Schumpeter, 1936). On these grounds, the selection of the candidature is justified as both the entrepreneurs did not settle after establishing or converting an opportunity to a successful business unit (Bull & Willard, 1993). Similarly, other entrepreneurship theories propose that entrepreneurs and entrepreneurship are characterized by various attributes like the personal traits (motivation, skills, expertise, ability, etc.), external environment (team, Government, policy framework, economic impact, etc.), speculative ability that helps in identification of opportunity and look into the future, etc. (HopenHayn & Vereshchagina, 2005). The mix of these traits varies in every individual, and so the new combinations tried out by the entrepreneurs vary. As pointed by Sawney, Wolcott and Arroniz (Sawhney et al., 2006), innovation plays a small role in creating business value; but if the innovation is mixed appropriately with these traits, it can lead to better and more successful entrepreneurship. The selection of both the entrepreneurs is justified based on the theories whereby each one has a distinct profile, has successfully ventured into new business opportunities, and have kept the stone rolling after that.
The values for the attributes mentioned above are analysed individually to understand the differences between the two profiles based on the entrepreneur theory discussed above. This would justify the selection assertively.
- Personal Traits: This comprises of the attributes of motivation, personal skills, expertise and entrepreneurial ability. For Jack Ma, his inclination to the use of internet served as a motivation (Shiying & Avery, 2009) whereas for Richard Branson his zest to live life to the fullest by taking unprecedented challenges was the driving force. Jack Ma was keen about English, and he pursued his degree in that. He took up a management course in the year 2002. Branson was a weak student and gave up studies at the age of 16. Each has outstanding entrepreneurial abilities that can be endorsed by their profiles. This also is evident in the way the two groups emerged from their inception to date.
- External Environment: One has a setup in the Chinese economy, whereas the other in the European economy. When they started, China was a developing economy, whereas England a developed one. The Government bureaucratic systems for both the groups differed with Chinese being a more centrally controlled economy whereas England a free economy. Here, family support and finance availability also play a critical role.
- Speculative Ability: Jack Ma’s speculation for the choice of the sector, i.e. internet based business was risky considering the fact that e-commerce was still in its nascent stages. On the other hand, Richard started safe with records selling, growing it to a chain and then indulging in investments in various sectors.
- Future Outlook: Jack Ma’s outlook was focussed on the growth of the internet based business portals with the product and technological innovation at every stage. For Richard Branson, the future outlook was wider than selling records or music label alone. He ventured into many new sectors as an investor.
Considering the differences as pointed above, the comparison between the two leading high-profiled entrepreneurs at the global level is worthy and justified. It is ascertained that the combination of the above-discussed traits leads to making different choices of the opportunities available. Conversion of these opportunities to businesses requires strategic decision making along with resources, time and other skills. The process of transformation is different for every entrepreneur, and this is what underlines the business model of the enterprise.
According to the profiles mentioned above, one thing is evident that both the entrepreneurs have marked niche in their respective businesses. However, the underlying business or entrepreneurship models reflected by their profiles differ. The models differ because the attributes that lead to entrepreneurship differ for both of the entrepreneurs. The one thing that is common to both the entrepreneurs is the corporate nature of their entrepreneurship, which can be coined as corporate entrepreneurship. Therefore, the critique of comparison is the underlying business model and the approach followed by each one of them.
Corporate Entrepreneurship is defined as that entrepreneurial process wherein the teams in an enterprise plan, develop, launch as well as manage any new business. This new business is generally distinct from that of the parent company; however, it leverages the resources, market position and assets of the parent company (Wolcott & Lippitz, 2007). This type of structure is different from a venture capital or a spinout though. According to Wolcott and Lippitz (2007), the four corporate entrepreneurship models are the opportunist model, the enabler model, the advocate model and the producer model. Each of these models is characterized by the degree of resource authority and organisational ownership.
Organizational ownership dimension defines the one as the primary owner of the new business regarding responsibility and accountability. It can be focussed, i.e. restricted to an individual or group or can be diffused, i.e. spread across multiple groups in the organisation. The second dimension is of resource authority. It states how the finance is made available to the new business – from a dedicated pool or ad hoc. The initial model for every entrepreneur is the opportunist model, and so is the case with Jack Ma and Richard Branson. However, later the new combinations identified for the critical three factors – opportunities, the team and resources reflect different models (or a mix of models) followed by each one of them. Jack Ma’s progress reflects the enabler model, whereas, for Richard Branson, a combination of opportunism and producer model is reflected. Before analysing why they map to these models and comparing these models, let us have a brief understanding about each of these corporate entrepreneurship models with the help of the examples provided in Figure 2.
- Opportunist Model: With diffused ownership in the new business and ad hoc resource allocation, organisations practising this model are open to experimentation and also have a great social network. Both these aspects are mutually dependent. Mere experimentation without a backup support can fail due to lack of funds and vice versa. The best example is that of the medical device company called Zimmer. Despite the existence of purchasing power parity, the company has willingly taken up new researches and developed the ideas for which people are ready to pay the premium as well.
- Advocate Model: Per this model, funding is not a problem, but ownership of the new business is a question. This is illustrated by the performance of the company DuPont. Despite a steady performance that leads to small margins in the business, the CEO was not satisfied with the growth and appointed an individual to take responsibility for the growth of a business unit. This worked positively for the conglomerate.
- Enabler Model: In this model, the company provides dedicated resources for new business ideas if they meet the company’s strategy. The ownership is diffused in the subgroups; however, these groups should meet the directives and guidelines for selecting the specific opportunities. If the criteria are met, then the group can undertake the opportunity, which is funded by the company. Here, entrepreneurship is practised at all the levels in the organisation under the directions of the company owner of- course. This is evident in the business model of Google where human resources are helped to explore their entrepreneurial abilities in the interest of the company while utilising the company’s resources.
- Producer Model: In this model, corporate entrepreneurship is pursued by not only dedicating funds but also actively influencing the funding. This model’s approach is to opt for non- core business related opportunities that lead to cross-unit collaborative opportunities for the in-house teams. This model targets cross-cutting or disruptive opportunities, which require dedicated and significant funding. Expertise in new business developments, re- integration to the existing system and internal decision authority are the success factors. IBM, Cargill and Motorola have used variants of this model.
In case of Jack Ma, the underlying corporate entrepreneurship business model registers with the strategic goal of the Enabler Model, which seeks entrepreneurial abilities in the teams and individuals. This is further supported by his background of inclination to the use of the internet for innovative things and being the first one at many aspects of the internet businesses in China. He is not the expertise with the program development, but he has superb seen- through into the future that has helped him and the Group to evolve to this stage. He has utilized the funds dedicatedly to foster different other business units, all related to the mainstream business of business- to- business marketplaces on the internet. The Alibaba Group has essentially made its presence strong in the e-commerce with a focussed development. Like the case of Google, Alibaba as well enables others to participate and grow along with the Group. This is why it has been more comfortable for the entrepreneur to retire as the CEO from the Alibaba Group and take up other opportunities.
For the Virgin Group, it is evident that Sir Richard Branson has tried his hands on every possible business unit that was not related to the core business of the company. The Group started with record selling and music label companies initially, considering the opportunist model. Later Richard observed the different market opportunities as an investor and used dedicated funds to expand by establishing and acquiring new business units into different sectors like that of entertainment, telecommunication, airlines, rails, media, beverages, etc. which were not necessarily correlated to the basic business unit. This shows that the entrepreneur was actively looking out for various business opportunities with dedicated and focused funding. The business units were developed and later merged or divested based on the returns. Richard strategically invested in different new units or opportunities that helped him build a kind of portfolio that could balance the returns generated for the parent company.
As the type of businesses being pursued by each of the entrepreneurs differs so is their business approach. Where both the entrepreneurs have started from the ground level, they have opted for different businesses based on their interests and motivation (Christensen & Raynor, 2003). Jack Ma pursued his interest in the utilisation of internet as a marketplace for commerce and trade, Richard Branson pursued his interests to live life to the full by taking up different challenging opportunities and maintaining a well diverse profile. They chose such business models that would help their businesses grow in the right direction according to their needs. To sustain an online business, the requirements differ than that of having physical stores. Understanding this difference in the business requirements is important. Besides, the goals and vision of the entrepreneurs is another major directive in setting up the business model. Richard wanted variety whereas Jack Ma wanted to be in the leading position.
Richard distributed his funds into multiple business units (which may or may not be related to other units), but Jack dedicated his funds to the business units that were core to the mainstream business and fitted in the strategic frame of Alibaba. Jack, therefore, ventured into such business units that were supportive or expanded the core business of the Group. On the other hand, Richard was not bothered about the correlation. He decided to mark his presence everywhere. This is evident in the types of business units he opted under the Virgin Group. AS the ideologies differ, the two dimensions that describe the corporate entrepreneurship also differ. In case of Jack Ma, the organisational ownership dimension is diffused whereas the resource authority is focussed. For Richard, however; the organisational ownership as well as the resource authority both remain focused or dedicated respectively.
By the empirical studies and the above discussion, it can be concluded that the entrepreneurship model that is successful for a given entrepreneur might not be a hit for other as well. Besides, the degree of success attained in a new business unit by an entrepreneur might as well differ from the other. There are multiple factors that lead to the choice of a business model besides the very choice of the business sector itself. These factors are the characteristics of the entrepreneur like the personal traits, the external environment, speculative ability and outlook. The choice of sector or sectors is primarily influenced by the personal trait factor – purpose, motivation and vision of the entrepreneur. The progress or growth path of converting entrepreneurship to a corporate entrepreneurship requires speculative ability and outlook as well. External environment governs the growth both positively and negatively. However, making things positive by combining the factors in the best possible way is what makes an entrepreneur.
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